A step-by-step guide to borrowing against your assets

Thanks to the tricky financial climate, a lot of us are quite focused on ways to save and generate money. In the last few years, the idea of securing a loan from an online pawn shop has become more popular – but how do you go about borrowing in this way? Check out my simple step-by-step guide to find out more.

Step 1: Decide what kind of loan you need

Before you begin, you need to decide what kind of loan you need. Borrowing against your possessions can be great if you’re after a short-term loan (we’re talking around six months here), but it’s not really a long-term solution. So, if the latter is what you are looking for, you’ll probably need to review alternative options.

Step 2: Your valuables

The whole process begins at home. You need to work out which of your valuables you could feasibly take out a loan against. Online lenders offer cash for items like luxury watches, jewellery and fine art, as well as larger possessions, like prestige cars and yachts.

You should be able to get your valuables assessed by your loan provider free of charge. So, you don’t need to worry about forking out for an independent assessment, or simply guessing the value yourself! This brings us on to the next step.

Step 3: Valuation

Obviously, before you can get a loan, you need to have the value of your asset assessed. Why? Well, there are two key reasons. Firstly, your loan provider needs to know how much it is worth so they can decide what sum to offer you for it – as well as whether they can give you a loan in the first place!

Secondly, you need to understand exactly how much it is worth. After all, if you don’t, how will you know you’re getting a fair price for it?

This is why it’s so important to choose a reputable online loan provider. These will employ a team of experts who will accurately determine the worth of your items. In special cases, such as for unusual antiques, external specialists will be consulted to ensure the absolute accuracy of the valuation.

So, how do you get your items valued?

• Post them by secure courier
• Have an at-home assessment
• Arrange to meet with the provider’s experts
• Meet specialists onsite (such as where your yacht is moored)

Step 4: Receiving a contract and accepting your loan

When applying for this kind of loan, you won’t be subject to any kind of credit check. Whether your application is approved will depend entirely on the value of your items.

If you get the go-ahead, you will receive a contract and, once you have agreed to the terms, you should receive your money (up to 70 per cent of the asset’s value) within 24 hours. So, it’s handy if you need cash fast!

Step 5: Repayment

The next step is the one you’re probably most concerned about: repayment. Depending on which provider you choose, online loans can be pretty flexible in that you might be able to repay the sum at any point within your loan term (which is usually six months). So, you don’t need to worry about things like incurring fees for early payment.

If you fail to repay your loan, your asset will be sold to cover it (plus any expenses the company had to handle, like shelling out for auction fees) – but the surplus should be given back to you.

Step 6: Be reunited with your possessions

When your loan is repaid, you will be reunited with your possessions. So, you’ll have had a short-term cash boost without having to sell off anything with sentimental value. Bonus!